Lawyers fight over tax rules in Harris Co. commissioner's trial

Lawyers in Eversole trial argue over tax rules

BRIAN ROGERS, HOUSTON CHRONICLE |
March 21, 2011

Defense lawyers for Harris County Commissioner Jerry Eversole fought with federal prosecutors Monday about the tax implications of loans and gifts and the details of more than a dozen trips Eversole took with real estate developer Michael Surface since 1999.

Eversole is on trial in U.S. District Judge David Hittner's court for conspiracy and tax fraud, accused of taking more than $100,000 in cash, gifts and trips to influence five multimillion-dollar building contracts with the county.

Early Monday, FBI agent Kathryn Prado testified that Surface paid almost all expenses for both men and architect Leroy Hermes during a dozen trips around Texas and the U.S. including Nevada, New Mexico and the Carolinas.

Defense lawyer Rusty Hardin seemed to undercut the testimony by showing other trips where Eversole and Hermes paid their own way, which were left out of Prado's original analysis.

"Hasn't the contention all along been that these guys are in a conspiracy and these guys are hiding it?" Hardin asked Prado. He said neither men tried to hide anything and pointed out that the evidence in the case stemmed from Surface's annotated his credit card records and Eversole's planners.

"You cannot point this jury to a secretive thing that Jerry Eversole and Michael Surface did on any of these trips, can you?" Hardin asked.

Although the men kept personal records on their activities, Prado said the arrangements would have not been uncovered if not for the subpoena power of the U.S. Attorney's Office.

"I don't think the general public would know about it," she said.

Later in the day, Hardin and Assistant U.S. Attorney John Pearson quarreled over the taxes Eversole may have owed on gifts and loans while the accountant for both Surface and Eversole testified.

Prosecutors were able to ask the accountant whether Eversole reported any loans or gifts as income for his personal taxes. He did not.

Hardin argued unsuccessfully that he should be able to ask the accountant whether loans or gifts are considered income. The issue is expected to be threshed out Tuesday when an IRS agent working with prosecutors during the past two weeks of the five-week trial will testify.